I find it eternally interesting how facts (which after all are “the facts” and should be pretty
I find it eternally interesting how facts (which after all are “the facts” and should be pretty straightforward) can be interpreted in any number of ways to produce new headlines and sometimes, potentially misleading statements.
Take for example a report out this week that when comparing the average mortgage repayment across regional Queensland (including Cairns) versus the average weekly rent, it is cheaper to own and pay a mortgage than it is to rent. How amazing!
Now factually, sure. Average mortgage payments are x, average rent is y, and playing by those averages, yes the average mortgage payer is better off than the average tenant. This does of course though, take absolutely no consideration of a number of pretty key figures. Namely that the average mortgage payment includes ALL mortgages, taken at ALL TIMES, from those signing up last week to those that bought 20 years ago (at 2004 prices). Comparing the situation of someone paying a mortgage taken out (at whatever interest rate) against a price paid for a property 20 years ago, versus the cost of rent today – that’s where things get a bit murky for me.
The reality is, that making the decision on buying versus renting TODAY, with the same property in front of you, renting IS typically cheaper than buying. This is the case even against the backdrop of higher rents, as purchase prices have risen just as much (if not more), and interest rates have of course near on tripled in 2 years. Then on top you have rates, potentially body corporate, insurance, maintenance and all the rest.
That’s today though. Go back 5 years though, and I can distinctly recall the legitimate comparison being made that buying absolutely made more financial sense than renting the same thing across a big portion of our market. And those that were in a position to do so then, have well and truly reaped the benefits since.
Despite the added cost, there is still a lot in favour of buying. There is the fact that on a principal and interest loan, part of your repayments are increasing your equity every month, you have a toe in the market for potential capital gains and you have the ability to make your own decisions around where you live and how long you live there. And that last one can be worth more than money.
As always, do your homework, and figure out whats right for your situation. But don’t always trust a headline.